ULIP vs RD vs Debt Mutual Fund – Know the perfect investment option for the risk-averse individual


In today’s era, earning money is not sufficient. Since your hard-earned money needs to grow every year, investment plays a crucial role to do so. There are several investment vehicles available in the market to ensure the adequate growth of your funds. Some popular options like a Unit Linked Insurance Plan (ULIP), Recurring Deposits (RD), and Debt Mutual Fund fall under the many preferred options of investments. 

Before choosing an investment option for your wealth generation, let’s begin by understanding each of the three investment vehicles in detail.

What is ULIP Policy?

A ULIP Plan is a dual benefit product, which provides the benefits of investment and insurance under a single integrated plan. Besides, it is risk-based investment option. For instance, if you’re an aggressive investor, you can invest in equity funds. If you’re a risk-averse investor, you can select debt funds.

What is a Recurring Deposit (RD)?

RD facility is generally offered by banks, which allows you to deposit a fixed amount every month. On depositing a fixed sum, you can earn interest at the applicable rate to fixed deposits.

What is Debt Mutual Fund?

Debt mutual fund is a combination of debt or fixed income securities like treasury bills, corporate bonds, government securities, and so forth.

The investment vehicles, which are ULIPs, RDs, and Debt Mutual Funds provides many benefits. However, due to several advantages, it is difficult to finalize a plan for yourself. To make the selection process easier, take a look below to understand the difference between these three products:

The difference between ULIP, RD, and Debt Mutual Fund:

Differences Unit Linked Insurance Plan Recurring Deposit Debt Mutual Fund
Objective Opt for ULIPs if you have a high risk-taking capacity Select RD if you want your investments to remain safe Choose debt mutual funds if you’re a conservative investor
Returns  ULIPs garner high returns if you invest in equity funds of a ULIP Policy Recurring deposits are suitable for you if you want to save some money on a regular basis with an assured return Debt mutual funds don’t offer fixed returns
Risk  ULIPs provide exposure to equity funds as well as hybrid funds Recurring Deposits are safe for investment Debt mutual funds are less risky


Ideally, you should select an investment vehicle based on your needs and preferences. However, a ULIP investment is an excellent choice for the growth of wealth as well as the protection of the family. Besides, there are other reasons why you should prefer a ULIP investment over other products:

Why invest in ULIPs? 


  • Dual benefits


A ULIP Policy allows you to secure not only your family’s future needs but also allows your participation in the equity markets. 


  • Tax benefits


Under Section 80C of the Income Tax Act, 1961, the premiums up to Rs 1.5 lakh paid towards a ULIP Policy can be claimed as a deduction from taxable income. Moreover, the maturity benefit is tax-free under Section 10 (10D).

  1. Switching options

ULIPs offer selection between two funds: equity funds and debt funds, based on your risk appetite. However, if you’re unsatisfied with the returns you can switch between funds.


Although there are plenty of investment options in the market, a ULIP plan is an excellent solution to meet your financial planning needs. The best ULIP Plan will help you realize your life goals with ease. However, see to it that you purchase a ULIP Policy based on your family needs.

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